Source · Select Committees · Environmental Audit Committee
Recommendation 29
29
Deferred
Paragraph: 108
Provide financial incentives to establish essential electricity infrastructure supply chain elements in the UK.
Recommendation
We recommend that the Government work with industry to provide incentives, including financial support, to ensure that essential elements of the electricity infrastructure supply chain are based in the UK, so as to counter competitive incentives from other countries racing to develop their domestic electricity grids. Government policy in this area should prioritise the maintenance and development of the clean UK steel industry as well as driving the UK technology sector.
Government Response Summary
The government states that clean energy industries are a priority growth sector and that it will set out its full approach to supporting UK supply chains in the forthcoming Industrial Strategy, without committing to immediate financial incentives for basing essential supply chain elements in the UK.
Paragraph Reference:
108
Government Response
Deferred
HM Government
Deferred
Overcoming the challenges facing supply chain resilience in the short term and into the future will require a collective effort across government, Ofgem, Transmission Owners, and the supply chain. We will be reviewing the need for an electrification roadmap alongside other new government initiatives, including actions to be taken as part of the 2030 Clean Power Mission and work to develop an Industrial Strategy. Significant actions to support the supply chain are already under way, such as: • A review of supply chain readiness11 was published by the previous government in April 2024 which identified the most constrained electricity networks components. The list included High Voltage Direct Current (HVDC) Cables and high voltage transformers. • As set out in the recent Invest: 2035 Green Paper, clean energy industries are a priority growth sector for the UK. Government will set out its full approach to supporting UK supply chains for the sector in the Industrial Strategy to be published in Spring 2025. It will contain sector plans for each of the key growth sectors, aligned with the multi-year Spending Review. • Market engagement by DESNZ and the Department for Business and Trade has allowed government to develop a potential pipeline of investors interested in making investment decisions to increase domestic supply chain capacity; the supply chain is currently considering projects domestically and internationally. Government must continue to engage and support investors to ensure projects receive appropriate support. • The electricity transmission network planning process has been evolving to ensure network design and investment processes are fit for the future. Strategic network planning will provide Ofgem with the information required to designate Transmission Owners to projects, allowing Transmission Owners to then develop detailed plans including supply chain procurement. • Ofgem is working to introduce an advance procurement mechanism for equipment for future transmission projects including those in Beyond 2030 with delivery dates out to the late 2030s. The mechanism, to be available from early 2025, is intended to then operate on an enduring basis. The mechanism was noted in Ofgem’s RIIO 3 Sector Specific Methodology (SSMD) decision12, which was published in July 2024. Its aim will be to allow transmission operators to secure supplier capacity ahead of final det